as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to be communicated in our report.
1. We have audited the accompanying standalone financial statements of Mac Charles (India) Limited (‘the Company’), which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including material accounting policy information and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (‘the Act’) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (‘Ind AS’) specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, and its loss (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (‘ICAI’) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements
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Key audit matter
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How our audit addressed the key audit matter
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Impairment assessment of investments and loans in subsidiaries
The Company’s accounting policy relating to impairment assessment of the investments and loans is set out in note 3.3 respectively to the standalone financial statements.
As detailed in note 07 to the standalone financial statements, as at 31 March 2024, the carrying values of Company’s investment in its subsidiaries amounts to ?3,443.93 million. Further as detailed in note 08 to the standalone financial statements, as at 31 March 2024, loans given to subsidiaries amount to ?1,838.06 million. Impairment assessment of these investments and loans is considered as a significant risk as there is a risk relating to recoverability of the investments and loans, and that impairment charge, if any, may be required to be recorded in the standalone financial statements. The recoverability of these investments is inherently subjective due to reliance on land valuations of the properties held, cash flow projections of these investee Companies.
The above impairment test has not resulted in recognition of any impairment loss during the period.
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Our audit procedures
included, but were not
limited to, the following:
• Obtained an understanding of the management process for identification of possible impairment indicators and process followed by the management for impairment testing.
• Understood, evaluated and tested controls around management’s assessment of the impairment indicators and the testing performed.
• Compared the carrying value of investments made and loans given to the net assets of the underlying entity, to identify whether the net assets, being an approximation of their minimum recoverable amount, were in excess of their carrying amount.
• Wherever the net assets were lower than the recoverable amount, for material amounts:
• We obtained and verified the valuation of land parcels and the properties of these entities done by management’s expert as per the government prescribed circle rates
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Key audit matter
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How our audit addressed the key audit matter
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Investment in subsidiaries and loans given to subsidiaries is identified as a key audit matter considering the significance of the balance, recoverability risks and involvement of significant judgment and assumptions.
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and prevalent market rate.
• Considered the independence, competence and objectivity of management’s external specialist involved in determination of the valuation.
• Involved auditor’s expert to independently assess such fair values as provided by the management.
• Obtained and verified the management certified cash flow projections for the projects and tested the underlying assumptions used by the management in arriving at those projections.
• Determined the appropriateness of the valuation methodology applied in determining the fair valuation of the assets of the subsidiaries.
• Challenged the management on the underlying assumptions used for the cash flow projections, considering evidence available to support these assumptions and our understanding of the business.
• We have discussed with management and obtained and reviewed the support letter from the Holding Company, Embassy Property Developments Private Limited, confirming that they would continue to infuse funds / capital into the subsidiaries
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Blue Lagoon Real Estate Private Limited, Neptune Real Estate Private Limited and Mac Charles Hub Projects Private Limited as and when required for the expansion of business / working capital / repayment of loans to Mac Charles (India) Limited.
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• Assessed the appro-
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priateness and adequacy of the disclosures made by the management in accordance with applicable accounting standards.
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Accounting treatment of borrowings and compliance with covenants
Refer note 21 to the standalone financial statements for borrowings obtained during the year and outstanding as at 31 March 2024 and refer note 3.5 and note 3.11 for the related accounting policy. As at 31 March 2024, the carrying value of borrowings in the nature of Non- Convertible Debentures (NCDs) amounts to ^8,233.10 million.
During the current year, the Company has issued further tranches of the NCDs for its upcoming real estate project. The Company had also issued NCDs to finance the upcoming real estate project of its subsidiary, Mac Charles Hub Projects Private Limited. Significant transaction costs were incurred and financial guarantees given towards raising such funds accounted for using the effective interest method given under Ind AS 109, Financial instruments (‘Ind AS 109’).
The interest cost incurred
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Our audit procedures, included, but were not limited, to the following:
• Evaluated the appropriateness of accounting policy for borrowings in terms of principles enunciated under Ind AS, including Ind AS 109 and Ind AS 23;
• Evaluated the design and implementation of Company’s key financial controls in respect of recognition of borrowing costs and compliance with covenants and tested the operating effectiveness of such controls throughout the year;
• Obtained and read the agreements for issuance of borrowings and evaluated the terms and conditions as relevant to ensure appropriateness of the accounting treatment;
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• Reviewing the amortisation schedules and performed re-computation based on the effective interest method as per Ind AS 109.
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by the Company on NCDs
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Key audit matter
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How our audit addressed the key audit matter
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issued for its project has been capitalized as cost of construction of the real estate projects for which such specific borrowings
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• Verified compliance of debt covenants as
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specified in borrowing agreements.
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have been obtained in
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Involved valuation spe-
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accordance with the
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cialists as auditor’s ex-
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principles of Ind AS 23,
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perts to assist in evalu-
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Borrowing Costs (‘Ind AS
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ating the appropriate-
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23’). Whereas the interest
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ness of key assump-
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cost incurred by the
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tions used for fair valu-
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Company on NCDs issued
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ation of assets used for
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to finance the project of its
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aforesaid debt cove-
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subsidiary has been considered as finance
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nant testing.
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cost.
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• Obtained the financial
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information of the Guar-
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Further, as per the terms of the related debenture deeds, the Company is required to comply with certain debt covenants including on debt
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antor from management to ensure that specific debt covenant in this respect is complied with.
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coverage and ‘Loan to
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• Assessed the maturity
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Value’ ratios that require
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profile of the borrow-
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the management to
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ings to evaluate the
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perform a fair valuation of
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classification and dis-
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assets pledged as security
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closure of borrowings
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at end of each reporting
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as per applicable ac-
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period, and requires determination and reporting of the financial information of the Guarantor.
Considering the significance of amount of borrowings and transaction costs, which required considerable audit efforts to test the accounting treatment of such borrowings, subjectivity involved in estimation of fair value of assets and determination of financial information of the Guarantor used for debt covenant compliance testing, we have identified this as a key audit matter in the current year audit.
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counting standards.
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Information other than the Standalone Financial Statements and Auditor’s Report thereon
6. The Company’s Board of Directors are responsible for the other information. The other information comprises
the information included in the Annual Report, but does not include the standalone financial statements and our auditor’s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged
with Governance for the Standalone Financial
Statements
7. The accompanying standalone financial statements have been approved by the Company’s Board of Directors. The Company’s Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under Section 133 of the Act and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
8. In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
9. The Board of Directors are also responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the
Standalone Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
11. As part of an audit in accordance with Standards on Auditing, specified under Section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances Under Section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
• Conclude on the appropriateness of Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Company to cease to continue as a going concern;
• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
12. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
14. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
15. As required by Section 197(16) of the Act based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under Section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor’s Report) Order, 2020 (‘the Order’) issued by the Central Government of India in terms of Section 143(11) of the Act we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
17. Further to our comments in Annexure II, as required by Section 143(3) of the Act based on our audit, we report, to the extent applicable, that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit of the accompanying standalone financial statements;
b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books
c) The standalone financial statements dealt with by this report are in agreement with the books of account;
d) in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act;
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2023 from being appointed as a director in terms of Section 164(2) of the Act;
f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company as on 31 March 2024 and the operating effectiveness of such controls, refer to our separate report in Annexure II wherein we have expressed an unmodified opinion; and
g) With respect to the other matters to be included in the Auditor’s Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us
i. the Company, as detailed in note 35 to the standalone financial statements, has disclosed the impact of pending litigation on its financial position as at 31 March 2024.
ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2024;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2024;
iv.
a) The management has represented that, to the best of its knowledge and belief as disclosed in note 44 to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any persons or entities, including foreign entities (‘the intermediaries’), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (‘the Ultimate Beneficiaries’) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b) The management has represented that, to the best of its knowledge and belief, as disclosed in note 44
c) to the standalone financial statements, no funds have been received by the Company from any persons or entities, including foreign entities (‘the Funding Parties’), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (‘Ultimate Beneficiaries’) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
d) Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement.
v. The Company has not declared or paid any dividend during the year ended 31 March 2024.
vi. Based on our examination which included test checks, the Company, in respect of financial year commencing on 01 April 2023, has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the software for accounting software SAP S4 HANA. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with.
For Walker Chandiok & Co LLP
Chartered Accountants
Firm’s Registration No.: 001076N/N500013
Hemant Maheswari
Partner
Membership No.: 096537
UDIN: 24096537BKFSAJ9461
Place: Bengaluru
Date: 23 May 2024
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